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    Which country would treasurer want to invest company funds

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    The treasurer of a major U.S. firm has $12 million to invest for 3 months. The interest rate in the U.S. is 0.42 percent per month. The interest rate in Great Britain is 0.52 percent per month. The spot exchange rate is 0.70, and the three-month forward rate is 0.71. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why?

    a) U.S.; earn an additional $47,211.16.
    b) U.S.; earn an additional $135,325.24
    c) U.K.; earn an additional $9,418.02
    d) U.K.; earn an additional $38,522.47
    e) U.K.; earn an additional $121,510.67.

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    https://brainmass.com/business/international-business-management/country-treasurer-want-invest-company-funds-398040

    Solution Preview

    Suppose the Treasurer invest in US, than

    Interest Earned for 3 months = 12,000,000*0.42%*3 = 151,200

    Now Suppose the treasurer invest in UK, then

    Conversion of $ into GBP = ...

    Solution Summary

    The solution provides a detailed step-by-step analysis and decides in which country would the treasurer want to invest the company's funds.

    $2.19

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